The media regulator estimates that ITV, UTV and STV, which all hold licences to broadcast news on the ITV network, would collectively have a shortfall of between £38m to £64m by 2012.
It has attributed this to increased competition from digital channels and the ad revenue downturn.
Ofcom says new funding will be required if regional news is to be maintained and has backed the Department for Culture Media and Sport’s (DCMS) proposal to allow consortiums of TV and newspaper groups to bid to provide local services.
The Ofcom report was made in response to the DCMS consultation into TV regional news. The government department is planning to conduct a trial of allowing the approach using consortiums.
The government’s Digital Britain report has also controversially proposed that non-BBC public service content, which includes regional news, could also be funded by “top slicing” or using money diverted from the BBC’s licence fee which would amount to around £130m a year.